San Diego Gas & Electric (SDG&E) today announced that it is actively bidding a group of energy storage systems and electric vehicle fleets as one resource directly into the California Independent System Operator’s (CAISO) energy markets.

These markets include those that address short-term imbalances in electricity supply caused by such things as intermittent renewable energy. The achievement ranks SDG&E as one of the first utilities to integrate electric vehicles into California’s wholesale energy market.

“This pilot project emphasizes SDG&E’s focus on innovation in the electric vehicle and energy storage sectors,” said James P. Avery, SDG&E’s senior vice president of power supply. “There is tremendous potential for dispatchable distributed energy resources to enhance reliability and achieve greater efficiencies. The key to unlocking that potential is to better understand how these resources provide value both at the customer site level and at the larger electric grid level. This project does just that.”

The project currently aggregates stationary storage systems together with the charging demand of EV fleets at five separate locations throughout San Diego County. The assets are remotely controlled using software that both balances the participant’s charging needs, and identifies opportunities to provide demand response services at the grid level. Demand response is when customers don’t charge EVs or consume energy at peak hours, which alleviates stress on the grid and helps make sure adequate resources are available for the entire region. The project achieves this by correlating charging activity with wholesale energy prices. By agreeing to not charge in certain high price hours, the aggregated resource is paid the marginal energy price in those hours, similar to a conventional generator. The pilot project will end in late 2015.

Besides being among the first to integrate electric vehicles into California’s energy markets, the project is identifying both barriers and best practices for future, large scale integration and interaction of dispatchable distributed energy resources with wholesale markets, and creating tools to evaluate growth opportunities for those resources.

“Creating a framework for small, aggregated resources to directly participate in energy markets is a natural evolution of SDG&E’s earlier, pioneering efforts at the San Diego Zoo and Borrego Springs Microgrid,” added Avery. “Those innovative projects demonstrated that aggregating diverse resources like solar, energy storage and EVs, created efficiencies and enhanced reliability.”

“This pilot creates an important connection between actual grid conditions and customer response,” added Heather Sanders, the CAISO’s Director of Regulatory Affairs for Distributed Energy Resources. “By having electric vehicles directly participate as a grid resource in the wholesale market, vehicles respond to signals from the grid operator to reduce when electricity is scarce, and continue or resume charging when renewable generation is plentiful. This capability helps maximize the use of energy from renewables while keeping the grid reliable.”

There are currently more than 13,000 EVs in SDG&E’s service territory, and the Governor’s Zero-Emission Vehicles (ZEV) Action Plan envisions 1.5 million ZEVs in California by 2025. Achieving that objective will require significant, near-term investment in workplace and multi-unit dwelling charging infrastructure to help increase EV adoption. In addition, reliably integrating and managing the associated increased charging loads necessitates innovative rate structures that encourage charging at optimal times and minimize system impacts at the local distribution level. Addressing these broader infrastructure additions and rate reform requirements is the subject of SDG&E’s Electric Vehicle Grid Integration (EVGI) Pilot Program Application currently pending before the California Public Utilities Commission (CPUC).